Man who lost millions for Amish investors settles with SEC

John M. Sensenig wears black and drives a horse and buggy. Like most Old Order Mennonites, he stopped attending school in the eighth grade.

But the 61-year-old Lancaster County man learned accounting and cultivated a reputation as a shrewd businessman. Then he used it to engineer one of the most devastating financial collapses the insular community has endured.

Between 1997 and 2009, Sensenig collected $90 million from 1,500 people nationwide. Many were farmers and craftsman, enticed by word of mouth or ads in Amish and Mennonite papers, promising returns up to 9 percent.

The money is mostly gone now, spent on business ventures that ultimately failed.

On Wednesday, a federal judge in Philadelphia approved a settlement between the Securities and Exchange Commission and Sensenig. He pledged to pay $131,500, about all he has left, and forgo any role in future investment offerings.

Kingdon Kase, the SEC's assistant regional director, called the punishment extraordinary. "He effectively is barred from ever again being involved in an unregistered offering of securities," Kase said. "That's pretty strong relief."

Sensenig did not return a call seeking comment and doesn't have a lawyer. He still lives outside New Holland, attends weekly church services, and works as a plastics welder, according to locals.

Breathtaking losses among a people that pride themselves on simple lives are a newer phenomenon - possibly fueled, experts say, by their transition away from farming into more cash-rich businesses.

But they are not unheard of. Last year, Monroe Beachy, an Ohio man dubbed the "Amish Bernie Madoff," got 6 1/2 years in prison for defrauding more than 2,700 mostly Amish investors of $17 million.

Estimates for losses in Sensenig's case range from $45 million to $65 million. Some in the Plain communities, as they are known, saw their life savings or retirement funds disappear. Records show he kept taking investors' cash for four years after state securities officials told him to stop.

But unlike in the Ohio case, there never have been signs that Sensenig is the subject of a criminal probe. And only two investors sued him to recoup their money.

In that respect, Sensenig might have benefited from long-standing traits unique to the tight-knit, turn-the-other-cheek world of the Amish and Old Order Mennonites:

Trust your brethren. Resist outside influences. Be forgiving.

"The biggest part of the trust factor was that he was one of us," said Allen N. Hoover, one of three Old Order Mennonites appointed in 2009 by the church to take over Sensenig's company, Conestoga Log Cabin Leasing, and investigate its failure.

Hoover, an Ephrata resident, said the committee interviewed hundreds of investors and found that many turned over their cash without even knowing how Sensenig planned to spend it.

"The most common answer we got was: Well, he's one of us. Why shouldn't we trust him?" Hoover said in an interview Wednesday.

For years, Sensenig ran classified ads in Amish and Mennonite papers touting promissory notes with annual returns of 6 percent to 9 percent.

As described in the investor application, his "service" started as a safety net for older members, a way to help pay grocery and doctor bills for folks not registered for Social Security. Sensenig vowed not to "play with stocks," or to let outsiders in. "We ask only that our own people (Amish/Mennonite) invest," the application read.

Many who joined were impressed by his knowledge and confidence on the topic of financial investing. And that he did so in their native tongue.

"John would speak Pennsylvania Dutch to them," said Dave Crill, a Lancaster County private investigator hired by one investor to examine the scheme and who later co-wrote a book, A Thief in the Church, about it. "If you can speak Pennsylvania Dutch in this community, you're golden."

According to the SEC filings, court records and a letter from the committee, money flowed in from 27 states to Conestoga Log Cabin Leasing. His clients were technically lenders, not owners, and Sensenig used their cash as he chose. He funneled it into 15 other companies. It was a diverse group: One was a foundry, another built log cabin kits, a third operated a campground and amusement park.

In the beginning, the investments appeared to pay off. But Sensenig was really using new contributions to stay afloat, funneling that cash to pay early investors, the church examiners found.

Most of his companies were high-risk start-up ventures. Few made money. "It is likely most of them never have been profitable," the committee report concluded.

In a 2006 settlement with the Pennsylvania Securities Commission, Sensenig agreed to stop peddling unregistered securities and to return investors' funds. But before the commission notified them about the refund process, Sensenig fired off his own letters urging his lenders to ignore the state commission.

"If you do not reject what it says, they will shut us down and sell us out at salvage value which would cause you and everybody to loose [sic] a lot of money," he wrote.

Crill estimated that Sensenig collected at least $25 million more from investors after the state stepped in. He thinks the regulators and law enforcement could have moved faster or done more.

"It torks me off," Crill said. "This is a really vulnerable community."

But he recognized a glaring obstacle: the unwillingness of victims to cooperate. Among the Plain community, filing lawsuits or initiating any sort of criminal probe is as taboo as jury service or getting involved in politics. And the tradition of non-resistance is hundreds of years old.

"It's really a resistance to getting the government involved in anything, if possible," said Steven M. Nolt, a history professor at Goshen College in Indiana and co-author of The Amish.

The internal church committee found the most tragic cases were not those who lost the most money, but those who had the most to lose. Hoover described one elderly man who plowed $40,000 - all his money - into the investment and got nothing back. But, he said, "with our church structure, we will never let them go hungry."

Sensenig initially cooperated but ultimately became adversarial and "walked away," according to Hoover. He still attends weekly services, but is prohibited from an active role in the church.

There is quiet outrage in some corners, Hoover said, but "the forgiveness factor" is overriding. In that sense the community is more united than divided, he said.

"John certainly did wrong. Whether he did it purposely or not is beside the point," he said. "We need to forgive him and move on."